17 May 2011

Dunderdale to hide important Muskrat details from scrutiny/oversight #nlpoli

Premier Kathy Dunderdale may like to tell people her Muskrat Falls project is the lowest cost option to supply the province with electricity but she is planning to use  changes to the Electrical Power Control Act and the Public Utilities Act made in 1999 to hide important details of the Muskrat Falls deal from public scrutiny.

Under the 1994 Electrical Power Control Act, the Public Utilities Board had a mandate to ensure that power generation came from the lowest cost option available to whatever company was proposing a new power source. 

As well, the PUB itself could direct a power company to supply energy destined for export to meet provincial needs.  That included recalling power from Churchill Falls beyond the power covered by the 1969 contract with Hydro-Quebec.

In 1999, Brian Tobin’s administration amended the two acts in 1999 to cover a situation in which the provincial might have to find additional electricity to meet anticipated demand on the island but didn’t have an a transmission line rom the Lower Churchill project to the island. 

Then energy minister Roger Grimes explained the entire situation in debate on the amendments in the fall 1999 sitting of the House of Assembly.

The [ 1994] legislation absolutely required that the only way Hydro or anybody else could consider bringing on new sources of electricity was to go to the PUB and prove that it was the least cost power, the lowest cost. That is the only thing allowed to be considered under the present legislation.

He then added:

…there will be circumstances where we will need electric energy - it will have to be generated because we do not have it available at the present time - sometime in the next decade or longer, while we are waiting for an in-feed from Labrador. If the only way you can bring it on is to go through a proposal where it has to be lowest cost, then there may be circumstances whereby a development that needs to occur because it is in the best interest of the Province, either for continued social development or continued economic development, that we need to be able to consider something, even though it might be marginally a little higher in cost than some other options that could occur that would not fulfill the immediate need but would provide energy to the grid but not necessarily fulfil an immediate need.

Of course, the situation changed dramatically in the dozen years since Grimes shepherded the amendments through the legislature. 

Despite that, however, the Dunderdale administration will be using the exemptions to make sure the Public Utilities Board doesn’t examine the project to see if it really is the lowest cost alternative. CBC’s David Cochrane reported the exemption story on Monday night but later tweeted this correction/clarification:

On Muskrat: exemption doesn't apply to PUB rate setting process. It applies to PUB cost benefit analysis. Means no public hearings. 1/2

Govt says it will consult PUB on project. But its oversight function will likely be restricted from its normal reach 2/2.

- srbp -

Great Gambols with Public Money Update:  Having broken the exemption story on Monday, David Cochrane added some important details on the St. John’s Morning Show on Tuesday.

The biggest new point:  government is rationalising the exemption by claiming the projection is outside the mandate of the PUB.  The board is supposed to set electricity prices and regulate the industry, according to the debriefed account of government’s line. This project is about economic development and the poor old PUB shouldn’t be bothering with those things.

That’s bullshite, of course.  The board is supposed to be regulating the industry to make sure consumers are getting the lowest cost power.  By exempting Muskrat from scrutiny,  Kathy Dunderdale and her cabinet are specifically and deliberately keeping the PUB from doing its job of protecting consumers.

More importantly, the exemption rationale confirms that Muskrat Falls is definitely not the most economical way to bring new power to the island. 

Now the project is being sold as “economic development”.  Using the Sprung Greenhouse rationalisation, that’s government code for a project that makes no economic sense whatsoever.   Every provincial government in this province that wanted to build something that turned into a financial disaster insisted that the thing was about economic development and therefore worth all the spending, cost over-runs etc.

Taxpayers can get ready for a disaster of historic proportions.  All the signs are there.